Archive for February, 2011
Greg Combet, the Climate Change Minister who Bob Hawke thinks could/should succeed Julia Gillard as Prime Minister, has told the community, via an interview with Brisbane’s “Sunday Mail” newspaper, that the best way to deal with the cost of his government’s proposed carbon tax is by saving energy. “Turn things off at the wall. Think about how often you use the air-conditioner. Use a cheaper-to-run hot water system. Change the light bulbs. Have you got insulation?”
However, he agreed that spending money on these measures is not an option for people renting homes and for low-income families.
In the week Combet gave this interview — a week in which Gillard seemed to use the national media fixation on the Christchurch earthquake to mask breaking her election promise not to introduce a carbon tax — the Secretary of his department was appearing before the Senate Estimates committee and acknowledging that the government has not modelled what average carbon price will be necessary to achieve 160 million tonnes of annual abatement, the level required to deliver the national target of reducing emissions to five per cent below 2000 levels by 2020.
This is the critical number in the debate; not the deliberately low initial price that it apparently being proposed.
Senators were told that, under the failed Rudd emissions scheme, the first year price would be just $10 a tonne, rising to $26 in 2012-13 and then going up by five per cent a year to 2020.
In case your solar-powered calculator is flat, this delivers a price of $36.58 in 2020. But this is a carbon charge to achieve about 140 million tonnes of abatement, the target in 2008 when Treasury did the modelling.
What’s the price for 160 million tonnes, let alone for what the target actually will be at the end of the decade on present electricity production trends?
The Rudd approach, after all, was based on government estimates that coal-burning generation would still account for 43 per cent of power supply as late as 2030,falling from 72 per cent now, with gas-fired generation rising to 37 per cent of supply. What’s not appreciated by laymen is that every three combined cycle power stations equate, in emissions terms, to one coal-fired plant. In very round terms meeting new growth and replacing some old, inefficient coal burners by 2020 via gas could equate to adding three or four Kogan Creek plants to the mix — the 750 MW Queensland power station is the newest coal plant in the country and burns 2.8 million tonnes of coal a year.
The target by 2020, allowing for a rise in power production, could be about 200 million tonnes.
Will Julia Gillard or Wayne Swan at least order the Treasury to model the 160 million tonne target price and guarantee to publish it asap?
Meanwhile Combert is telling voters that predictions of a $300 a year increase in average home power bills arising from the carbon tax are “just speculation.” Actually, there is no need to speculate. If the carbon price opens at $26, the average home using 8MWh a year will pay $208, a home using 10MWh (with more than one air-conditioner) will pay $260. When the carbon prices reaches $36, the 8MWh householder is facing a bill of $300.
But what if the carbon price needed to deliver a 160 million target is $50 (or more)?
And here’s another piece of arithmetic. At the $26 charge level and 8MWh average consumption, the aggregate hit on eight million or so households is pushing towards $1.7 billion a year. Using the Treasury accumulator numbers for the tax, and not even bothering to account for an increase in the number of households, the aggregate cost for Australian households between 2012 and 2020 will be in excess of $20 billion. Just how much of this will be given back to residential customers by Gillard, Combet or whoever is leading the country over the decade?
You would have to be a dim bulb not to work out that there is a world of pain down this road — and that’s only for household power bills. What impact will the carbon charge have on people’s other costs as it feeds through the supply chain?
The post earlier today about the Gillard government’s new move on carbon pricing contains an arithmetical error. The cost of eight megawatt hours of consumption (average national residential demand) at a $25 charge would be $200, not $300 as written, and by extension, at a $50 price, would cost $400, not $600 as written. Several people have contacted me to point out two variations from the average household national consumption of 8MWh a year: an increasing usage of a number of air-conditioning units per dwelling means that many now consume 10MWh a year or more, especially in areas like south-east Queensland — and there is evidence that many people caught in the poverty trap, for a range of reasons, use 10 to 12MWh a year. It has also been pointed out that average electricity use in Julia Gillard’s home State of Victoria is lower than the national average (at around 5MWh a year) because of the large portion of the cooking and heating market held by natural gas.
Take it to the people.
This is the simple message that Tony Abbott should be hammering from today on the carbon tax.
It’s a demand that should be supported by the national media in the public interest.
Julia Gillard cannot escape the fact that she “won” last year’s poll on a promise that “There will be no carbon tax under a government I lead.”
The “he did it too” argument – pointing to John Howard’s broken “never,ever” pledge on the goods and service tax in 1996 – won’t wash for Labor because Howard went to the polls on the issue in 1998.
Going to the polls mid-year will resolve both the public’s willingness to have a carbon tax imposed and the “hung parliament” issue.
For the government and the Greens, constantly harping on how Australia needs to show the world a decarbonisation lead, it will have the additional value of demonstrating the willingness of the public to support abatement. They hope.
It also will have the not-unimportant economic value of providing key coal-fired power businesses and their bankers with some certainty: as Fitch Ratings has just pointed out, three-quarters of Victoria’s brown coal generators face significant debt refinancing in 2012.
Fitch estimates that they have $2.4 billion in project finance debt maturing. “Refinancing,” says the agency, “will be tough should capital markets conclude that a carbon price will result in economically-impaired plant.”
Playing Russian roulette with key elements of the east coast power supply, which is what Rudd did and Gillard is now doing, is a really bad idea, given the core importance of electricity in the economy.
Let’s now have Gillard bring down a May Budget in which the government’s taxing and spending plans are set out clearly, including a full statement in the forward estimates of this decade’s carbon tax revenue and compensation, and then let’s have a winter election.
Let’s have a clear policy statement by Gillard on the level of carbon tax to be imposed until at least 2020.
The “transition to emissions trading” argument is a furphy designed to disguise the fact that the carbon price needed to achieve the 2020 target is not around $25 a tonne, as is being hinted, but somewhere near $50. So long as the government can waffle about “letting the market decide,” it can avoid telling the public the true cost of meeting the 2020 target – which now requires a 160 million tonnes a year reduction in our national emissions.
Kevin Rudd, Penny Wong, Gillard and Greg Combet have dodged and weaved on this long-term cost point from the get-go of this debate.
Let Gillard now go to the polls with a clear message: vote for this tax and you are voting for a $300 increase in your power bills at the start – the average residential consumption of electricity is about eight megawatt hours a year and the average rate of generation emissions is about one tonne per MWh, so a $25 tax represents a $300 extra cost – and about a $600 increase by the end of the decade if the true carbon price needs to be $50.
This will be a cost on power bills in addition to the network charges, the renewable energy target, the solar feed-in tariff costs and, eventually, the smart meters costs.
Also needing to be factored in is the rising take of the GST as costs go up.
As the Australian Industry Group acknowledged in its “Electric shock” paper this month, the price of electricity is likely to double by 2015 under the weight of these higher costs.
What this means for a household now paying about $1,500 a year for electricity is that the 2015 bill will be about $3,000 – and will continue rising in the second half of the decade because of the need to press on with multi-billion dollar network augmentation, the higher cost of the fully-implemented RET and the carbon price.
What it means for Australian business collectively, again using the AiG report, is that their total annual power bill will rise from $13 billion now to about $26 billion in the second half of the decade. For firms having to also factor in the prospect of much higher liquid fuel bills later in this decade, this has serious implications — ones not being discussed in the present debate.
Gillard will also need to take to an election a precise promise on who will be compensated for the carbon costs.
A Budget headache for future governments is that there will be about 750,000 to a million Australian households actually unable to pay these steep electricity bills and requiring welfare assistance – half of them in politically-volatile New South Wales and Queensland.
The genuinely distressed homes must be helped and, beyond them, the government confronts the better-off voters who notionally can afford to pay the much higher power costs but do not wish to do so – the ones to whom Kristina Keneally and Barry O’Farrell are offering a $250 handout in the present NSW election, a handout that, assuming a million households will benefit, amounts to a pledge to spend $3 billion of taxpayers’ funds over the next eight years, roughly the cost of the Parramatta/Epping or north-west rail links.
The national decarbonisation debate has become shrouded in the “fog of war.”
Using opinion polls and focus groups to assert what the public wants is no way to make policy.
This issue needs to be resolved for at least this decade – and the national interest dictates that the current “hung” parliament problem be resolved, too. Having important policies decided by a coterie of a left-wing Green and three populist independents may amuse the media, but it is a bad idea for the nation.
So, let’s go back to the polls and vote on the carbon tax and on who should govern the country.
Business, says the Australian Industry Group, in its new commentary on electricity prices, is spending $13 billion a year on buying power, half of the bill being to the account of manufacturers.
The AiG goes on to acknowledge that it is likely electricity charges will double by mid-decade, when you add a carbon price to network costs and the range of other factors now in play, including the potential impact of greater use of gas in power generation.
It follows, doesn’t it, that Australian business therefore faces an extra $13 billion a year hit on its bottom line just from the power bills by about 2015?
Which makes it all the more startling that the AiG report sadly admits that a survey it has run found that nearly two-thirds of the companies interviewed had not improved their energy efficiency over the past five years and almost as many do not plan making any improvements in the next two years.
This is despite the AiG calculation that Australian average retail prices for power increased by an average of 30 per cent between 2006 and 2010.
AiG’s Heather Ridout says it follows that the lobby group needs to work with its member companies and government to ensure that industry has the support it needs to get on the front foot do deal with this problem.
Surely it also follows that a sharp rise in input costs should be sufficient incentive to make a business pursue efficiencies in its own interest? Even when, as is the case for many businesses, the electricity bill today amounts to only about two per cent of the budget.
Energy-intensive, trade-exposed industries may focus on power management as core business, given that it represents 20 per cent of their input costs, but, on the AiG’s representation of the wider business mindset, the attitude out there appears to be “the government should do something.” These managers obviously need reminding that self-interest starts at home.
It isn’t only power costs that are on the rise – the AiG points out that Australian business spends another $6 billion a year on buying gas.
Ridout argues that government can do more. Smaller businesses, she says, lack access to information and the capital they need. “Perverse incentives” in regulation that discourage demand management should be fixed. “There may be some role for a national efficiency incentive, though the detail will be difficult.”
Which begs the question whether having your costs doubled for a service where your own relatively low investment can reduce the burden isn’t incentive enough?
And why the business community, through its industry associations and using the extra-ordinary facility of the Web, cannot, even after a decade of talking about this issue, get its act sufficiently together to ensure that the information barrier is broken down?
The AiG commentary continues to exhibit the now-routine woolly business thinking on the components of power cost rises.
The report still harps too much on the cost of green energy when the RET is set in political concrete, is contributing a relatively minute amount to bills (other than for the EITEs) and is a critical rung on the ladder the federal government is struggling to built to achieve a decarbonisation goal in 2020. The RET, on the latest government emissions data, will contribute some 30 million tonnes a year of the abatement target, which rising demand (and use of fossil fuels) has now pushed out to 160 million tonnes by the end of the decade.
The report also grumbles about network charges without seeming to appreciate that the Australian Energy Regulator has careved billions of dollars from distribution service capex bids for 2011-15. This is a situation where the complaints about higher costs for making networks more reliable – and for dealing with the relentless increases in peak loads – only fall away when replaced by howls of anger when blackouts occur.
The vast bulk of the power cost burden for business relates to two factors: network charges and the cost of energy itself. The rises in these charges can be reduced by a cut in demand.
The breakdown of who buys power is always illustrative: 28 per cent goes to the residential sector, a third to energy-intensive industry and almost a quarter to commerce (which includes schools, hospitals etc). Commerce and non-EITE industry account for about a third of demand.
It follows that effecting a one-third improvement in their energy efficiency will result in a saving for non-EITE business of hundreds of millions of dollars a year, a number of billions over a decade.
So why, led by organisations like the AiG, are these companies not making a far greater effort to pursue this relatively low-hanging fruit? They would leave governments with far less wriggle-room on pursuing the necessary policy and regulation improvements if they did so.
Engage in an amusing, but meaningless project to drive a wind-power car from the top to the bottom of mainland Australia and you can be assured of wide media coverage. Some 60 stories in a couple of days, according to Google News.
Spend $5.5 billion over 10 years on decarbonisation schemes which turn out to deliver abatement at an average cost of $168 per tonne of emissions, which is what the Howard, Rudd and Gillard administrations and some State governments are now said to have done, and it merits just one story — written by Lenore Taylor and Mark Davis of the Fairfax papers, drawing on analysis they undertook of available information.
It is this trivialisation of the carbon debate that plays in to the hands of those driving essentially socialist agendas, others who are well-meaning but misinformed and the populist politicians and their advisers — and leaves ordinary citizens bemused and increasingly unhappy about the issue.
The naive among us might hope that Climate Change Minister Greg Combet or his department might say straight up that the analysis of a decade’s decarbonisation is disappointing to put it mildly from the perspective of value for money — but, of course, nothing could be further from their minds.
Combet’s media spin, in announcing the departmental update of emissions projections, which it is required to produce annually as part of our Kyoto protocol commitment, is all about the need for a carbon price. His department goes a step further and says (on page 23 of its report): “These estimates (of abatement achieved by programs) do not attempt to indicate the economic efficiency of (them) or to calculate the cost per tonne of abatement.”
To which, your ordinary taxpayer might just be inclined to retort rather sharply: “Well, while the hell not?” A question one may hope that will be put to the department when the Senate Estimates committee holds its annual interrogation later this year.
(Questions about this would be, dare one suggest, rather more interesting to voters and useful to criticising government performance than the politically pathetic Federal Opposition effort in the past week in complaining about $300,000 spent to bring grieving refugees from Christmas Island to Sydney for the funerals of victims of the recent boat disaster.)
Mark Davis wrote a separate story focussing on the roof insulation scheme fiasco — the department having revealed that the $1.45 billion scheme (plus hundreds of millions more to be spent on fixing bungled installations) will deliver just 14.4 million tonnes of abatement between 2010 and 2020. This is a lot less than half the carbon abatement the federal government initially claimed the scheme would deliver. For some reason, the government was not able to put up a spokesman to provide comment to Davis on this issue.
Rod Sims of Port Jackson Partners — one of Gillard’s advisers to the parliamentary committee on decarbonisation — is reported as commenting: “Bad policies are eroding public support just when it is needed to establish a price on carbon.” Some of the schemes, he concedes, were “dreamed up” because Australia has not been taking substantive action. Some are “amazingly expensive” and will lessen public willingness to accept a carbon price when they are already feeling the pain or rising power prices. Well, they will have that effect if the Federal Opposition and the media can bring themselves to highlight the situation.
Given that we have a federal administration that now has so little confidence in its own governance that it has appointed an external committee, chaired by a former Liberal premier and federal finance minister, to vet its flood relief performance, a strong demand by the Opposition for a Productivity Commission or the Auditor-General to examine the efficiency of the carbon programs would both make good sense and produce, in due course, more real ammunition for it to fire at Gillard and her ministers.
Not all the inefficiency is at the door of the federal government, of course. The NSW State government’s sorry solar power subsidy program is estimated to be delivering abatement at $300 a tonne, the most expensive scheme of all — but those of us who live in NSW will have an opportunity on 26 March to deal with Keneally & Co.
Meanwhile the opportunity is also at hand to pursue the Tim Flannery-led “Independent Climate Commission” on this issue as it goes around the country busking for a carbon price regime. One of its duties is to explain “how a carbon price works and its inter-action with the economy and community.”
Is it too hard for the Opposition and other stakeholders to relentlessly ask Flannery & Co to provide real numbers for the size of carbon charge needed to meet the government’s 2020 abatement target and how this will fall in actual costs on at least two key areas: households and energy-intensive, trade-exposed industries, a major provider of direct and indirect employment?
We already have some insight in to the green side’s thinking on where the industrial blows should fall. A commentary by the Grattan Institute in the Australian Financial Review puts the black dot on aluminium and oil refining as two industries likely to move offshore under a carbon price. These two industries directly employ 10,000 people.
The past week has reinforced just how poorly so much of the mainstream media so often manage their responsibility to inform the community.
Obsessed with the furore over the “shit happens” story, a self-confection by a TV channel, most of the commentariat, because of a lack of people who can analyse the energy sector with any real understanding of context and issues, has paid little attention to the two most important power-related points to emerge this week.
The first was a front-page story in the Australian Financial Review in which Paul Simshauser, AGL Energy chief economist, finance professor at the Griffith University Business School and chairman of Loy Yang Power, reinforced the industry view that, on present trends, and including a carbon charge, consumer power prices must double by 2015. Given the 140 per cent increase in media “shock/horror” stories about power bills in the past two years, how this warning can be let through to the keeper without pursuit of Gillard and Swan, is beyond me.
The second issue to emerge was in the latest report from the Department of Climate Change on Australian greenhouse gas emissions — in which the key new fact is that achieving the five per cent below 2000 abatement target for 2020 now requires reducing emissions by 160 million tonnes a year by the end of the decade, up from 144 Mt, the department’s estimate only a few months ago.
Reporting this bald fact is far from enough, and not helped by all the “usual suspects” from the green side being given another opportunity to strut their stuff.
There has been far too little focus by the media and the Federal Opposition on the major issue: the carbon cost required to reach the 2020 target. The latest report stiffens the belief by some of us that a charge of around $50 a tonne is the realistic requirement, with major implications for residential and business customers, not least energy-intensive, trade-exposed industries.
Public perception, based on government spin under Rudd in particular, has been that the carbon charge will be low and residential users will be compensated. The reality is that that the target cannot be reached with a low charge and the real cost of compensation could dent the federal budget in the second half of this decade, even more so now that it faces substantial costs for extreme weather damage.
(How allowing householders to escape the impact of carbon pricing while giving some big users substantial compensation, too, works in terms of the abatement target escapes me — how going down this road works in terms of a sustainable economy is an even bigger question.)
I find a surprising number of people in the community under the impression that the Renewable Energy Target will play a major role in achieving the abatement target. As the new DCC report shows, the abatement to be achieved by the current RET will be just under 30 Mt in 2020 — not even a fifth of the target and requiring an outlay of about $20 billion of investor funds on wind farms, leading in itself to an increase in end-user bills of about five per cent at the decade’s end.
As for the ever-popular solar power option, DCC has made it clear repeatedly that putting PVs on every household rooftop in Australia would achieve just 16 Mt abatement in 2020 — and cost an astronomical $200 billion at present capex levels. (This does not stop the popular media from writing up solar in glowing terms every time another opportunity arises.)
The poor performance of most of the media with respect to analysing and reporting on the doubling of the power price and the real carbon charge needed to achieve greenhouse gas targets does not excuse the Coalition from its responsibilities to take up this issue.
The Coalition has performed poorly on this since, under Malcolm Turnbull, it ignored the original prediction in October 2009 — by the Business Council of Australia, using Port Jackson Partners modelling — and it has failed to take the issue up in any meaningful manner (other than sloganeering) in the last federal election and since Federal Parliament resumed.
Gillard, of course, keeps operating on the Hawker-Britton manual: her latest piece of spin being to hire Tim Flannery to fear-monger as background to her efforts, in concert with the Greens, to drive through a carbon price this year and retain voter support (in the recurrent opinion polls and at the subsequent “only poll that really matters”) by winning over the public mood.
This issue is an open goal for the Federal Opposition, but it seems unable to even find the ball, let alone shoot. Continuing to jump up and down about a small flood levy, albeit one that is probably not needed and is not especially popular with the community, is not the main game when the latest news highlights the size of the power problem with only a small amount of investigation.
Among the issues of substance requiring strong, continuous Opposition focus is the linked problem of power costs and the size of the carbon charge really needed to deliver the abatement target.
Repeating the “great big tax on everything” mantra, which did have some effect in the past, is not good enough.
The real point here is not just the benefit to the Coalition of the political opportunity to hurt Gillard and Swan, but the responsibility it has in the national interest to lead community understanding of what lies ahead.
In this respect, it has failed to date as much as the Gillard Government. Right now, it has an opportunity to score — and not just in its own interests.
An economist I hold in high regard has pointed out an important problem relating to carbon price policy in the wake of commentaries I wrote last week in Business Spectator and on this blog dealing with Julia Gillard’s CEDA speech and Ross Garnaut’s return to the global warming limelight.
“Does the Prime Minister realise,” he writes, “that the very moderate carbon prices – and consequently relatively benign impact on households and industry – projected in the federal Treasury’s modelling (for her predecessor to support the CPRS proposal) were based on the assumption that Australia could purchase a very large number of emissions trading permits from overseas?
“This was a massive assumption to begin with – but now there is absolutely nothing on the horizon (as there might have been before the UN climate change summit in Copenhagen in 2009) to offer the federal government comfort that such a trading scheme outcome is a possibility.
“If we have to achieve a five per cent emissions target off our own bat, the cost will be a whole lot higher.”
The five per cent target is the current official commitment – to reduce national emissions to this amount below 2000 levels by 2020. It involves, on Department of Climate Change numbers, a cut in emissions of 144 million tonnes annually by the end of the decade.
The Greens want a target of between 25 and 40 per cent for 2020, but Labor can’t make this commitment. Will Gillard and Combet, however, compromise by giving in to the Greens’ other demand for a $20 carbon price?
This would involve adding $4 billion a year to current costs of electricity production, driving up wholesale energy prices by about 15 per cent.
At this level, it would help deliver the forecast doubling of end-user power prices (compared with 2008 levels) by 2015, taking in to account network, RET and other costs, and even greater budget pressure in the second half of the decade – the more so when it is appreciated that, on the Treasury’s own modelling, $20 per tonne will not come close to delivering the 2020 abatement target.
What makes this prospect the more interesting is another communication I have received from someone with Labor connections who has recently seen private polling. “It would be impossible to over-state how high it (the price of power) is on people’s radar at present,” he tells me. “People are screaming about it. New taxes on everything are going to be a very hard sell.”
I don’t see much appreciation by commentators that the national political landscape will change on 26 March when New South Wales goes to the polls.
If voters deliver an election tsunami that, as some are now predicting, leaves the Liberals in their own right with some 46 seats, and the National Party with another 17 or so, with the ALP hanging on to 21 at best, the political waters will rip inland to Canberra and inundate the federal government’s own swish offices.
What’s more, the Greens’ right to dominate Gillard’s thinking on decarbonisation will not be reinforced if they only manage to win two seats, Balmain and Marrickville, in NSW at a time of maximum Labor weakness. (Their chances in the latter, held by leader-in-waiting Carmel Tebbutt, the present deputy premier, may not be as flash as the commentariat think, either.)
A verdict of this size in the largest voter region in the country, predicated in part by community rage over the Keneally government’s management of electricity issues and rising prices, cannot simply be ignored.
What should not be lost to sight here is last November’s Macquarie Bank commentary on price rises (see “Power surge” on its website) – which pointed out that electricity and other essential service costs rose 15 per cent in 2009-10, the largest increase since 1983, and are set to go up by another 12 per cent in 2010-11.
There is the underlying cause of community unhappiness and Gillard is as vulnerable to it as Keneally.
My economist friend’s new perspective on the carbon charge makes Gillard’s flirtation with this issue, obviously a key part of the deal behind the scenes that won her Greens’ support to form a government after federal voters delivered a hung parliament, and notwithstanding her election pledge not to introduce a carbon tax, makes the risk she is taking even more dangerous.
None of which will be much comfort to the rest of us – and fixing the problem after the next federal election may not be possible.
I listened to a deep Green boasting at Chatham House forum in Sydney late last year that, if a carbon tax could only be achieved in this federal term, the Coalition would be unable to reverse it even if it won the next election because it would not have the Senate numbers.
Here we go again: Ross Garnaut is back reprising his carbon price arguments, the federal government is suddenly active pushing the need for climate change action, coincidental with the floods and the cyclone (last time it was the allegedly endless drought) and the Greens are arguing for more radical action.
Many trees will be felled to print the newspaper and media reports on Garnaut’s return to the limelight, but this is all background noise — the real political action today is in the back rooms of Parliament House, Canberra, where the government and the Greens are seeking to find enough common ground to put forward a carbon price bill that can then be rolled through the Senate after July with the backing of the new Greens senators.
Amid all the verbiage, the essential fact appears to be that the Gillard government is attempting to introduce a fixed carbon price rather than an emissions trading scheme, allowing, of course, Tony Abbott to repeat his claims about “a great big tax on everything.”
Suggestions that Garnaut has blown Abbott out of the water with his new report don’t make sense to me. Householders (aka voters) do not have Australia’s role in “leading” the global abatement charge on their radar — they are focused on their budgets.
Already lost to media view — because after all it was published in November last year, an age ago in media land — is the Macquarie Bank commentary that pointed out that the 15 per cent rise in residential bills for all utility services in 2009-10 was the highest since 1983 and can be expected to be followed by a 12 per cent hike this year. What will it be in 2012-13, when we have a carbon tax to add to the cost — and that’s the federal election year?
How high this carbon price will be is the critical issue and, when this becomes apparent, its impact on community costs (and perhaps on jobs) may be the fact that has the most impact on polling and focus groups.
An important side-argument will be on compensation.
As Kristina Keneally’s panicked moves in New South Wales show, the focus groups are sending messages that voters are up in arms over power prices.
The basic point, cutting through all the media hype, is that, using the Rudd/Wong introductory carbon price, powers bill (taking in to account network charges, the RET and so forth) will double from their 2008 level by 2015.
Still hidden from the voter gaze is the fact that it will take a carbon price of around $35 per tonne to achieve the national carbon abatement target. This by itself will send up end-user prices by around 25 per cent.
In Victoria, if the carbon price is high enough, it will drive coal-burning power stations out of the market and their replacement gas-fired plants will be more expensive. In NSW, the carbon tax will ensure that the next tranche of baseload power is not cheap(er) coal, but higher-priced gas.
But this is all for later in the decade.
The here-and-now is a Groundhog Day repeat of Garnaut-mania in the media, who seem to be unaware that the previous flood of Garnaut views was actually followed by a fall in public support for climate change policies, a slump from which they have not recovered (see the latest Essential Research polling).
Garnaut’s central thesis still won’t fly: the ALP government, having lost its nerve under Rudd, won’t try to introduce an emissions trading scheme.
Contrary to one assertion in the media, Garnaut has not turned up the heat on Tony Abbott, but on Julia Gillard.
Garnaut’s latest assertion that the ALP “must not bow to pressure of special interests” is a good example of the butterfly preaching contentment to the toad beneath the harrow; coping with special interests is the driving force for politicians in this environment.
Gillard’s greatest fear may be that the next Groundhog Day will be the one repeating the death-by-opinion-polls of a Prime Minister, a fear that may well be heightened in late March when, as widely expected, the biggest State Labor party is smashed at the NSW election, a poll in which apparently power prices are a big issue.
Meanwhile Garnaut, Labor and the Greens, aided by the media, are adhering to that old political adage: never let a catastrophe go to waste. Whether even Queenslanders can be persuaded that a carbon tax will stop bad weather, I take leave to doubt.
And one may assume that Abbott and the Liberals have already drafted a TV advertisement for the next election (or even earlier). The one that shows Julia Gillard on Channel 10 on 16 August last year promising voters in the federal election: “There will be no carbon tax under the government I lead.”
Bob Brown’s egregious attempt to blame the Australian coal industry for the Queensland floods got quite strongly attacked in the national media last month.
Just how little he understands (or how he chooses to portray) the drivers of human-induced global warming becomes clear in reading the latest statistics from the US Energy Information Administration, which has undertaken a substantial effort to track carbon emissions around the world from energy use, excluding greenhouse gases from other sources, such as deforestation and methane emitted by farmed livestock.
While the dominant feature of the US EIA’s analysis focuses on how heavily future emission trends depend on China and the US, the world’s two largest emitters, with China in the lead since 2006-07, a little digging in the data throws an interesting light on Australian emissions.
The key Australian numbers are that energy-related emissions in 1980 were 204 million tonnes annually in 1980, reached 267 Mt in 1990 and 356 Mt in 2000, peaking at 425 Mt in 2008 ahead of the global financial crisis. This places us 15th among the world’s greenhouse gas emitting nations.
By comparison, Canada, which is ranked seventh, has had emissions rise from 457 Mt in 1980 to a peak of 610 Mt in 2007 ahead of the GFC — while Brazil, ranked 14th, has seen emissions rise from 185 Mt in 190 to 420 MT now and South Africa (12th) has seen a rise from 235 Mt in 1980 to a peak of 482 Mt in 2008.
Perhaps most interesting of all is the fact that, had our politicians not panicked over plans to turn to nuclear power in the 1970s for electricity generation and had we maintained emissions at the level they were 30 years ago, our annual contribution today would be some 220 Mt lower — but the world’s emissions would still be more than six billion tonnes a year higher than in 1980.
Even when one factors in Australian exports of coal — and it is interesting that Brown avoided any mention of exports of LNG, current and future from projects now under way — then the vast bulk of the increase in global emissions is still sourced elsewhere in the world.
Of course this is not an argument for Australia to take no abatement action, but the data highlight what a nonsense it is for populist local politicians to beat up on domestic energy industries when a global problem is so obviously caused by world-wide emissions many times the Australian contribution (whether domestic or as a result of burning fuel we export), not taking in to account the international emissions avoided through our exports of uranium and of lower-emitting gas.
In short, this is yet another example of the “never mind the quality, feel the width” spin embraced by Brown, his Greens and others in their efforts to sell their political line to Australians.
It may be too much to expect media reporters operating on the run to pick up what’s wrong with Brown’s rant, but why, one wonders, did the Gillard government, with access to all the data, allow him to get away with it? The answer in a hung parliament is obvious, but the government’s failure to pin him on this point is as egregious as his claims.